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Voters left the balance of power in U.S. government unchanged in Tuesday's election, and investors spent most of the rest of the week signaling their displeasure. The election, as well as uncertainty in China and Europe, sent the Dow tumbling below 13,000 for the first time since August.

Options activity on Election Day indicated that investors were wagering heavily on the results, and that Wednesday would be a big day one way or the other. When President Obama won, it became clear that numerous investors had put their chips on Romney, as stocks expected to benefit under a Romney administration fell hard. Coal companies and big banks led the biggest slump of the year in U.S. equities markets, with both the Dow Jones Industrial Average and the Standard & Poor's 500 index falling 2.4%. The next day, they fell again, marking the worst two-day slide in more than a year.

For the week, the Dow fell 278 points, or 2.1%, to 12,815.4. It was the Dow's third losing week in a row. The S&P 500 index fell 34.4 points, or 2.4%, to 1379.9.

QE3 had seemed to set a floor under the market, but that floor has given way.

The most immediate concern for U.S. investors is the "fiscal cliff," the series of tax hikes and spending cuts that will automatically go into effect if Congress and the president can't sign a deficit deal by Jan. 1. Divided government means that the same dynamics that resulted in a virtual standstill last year could return, with the stakes even higher.

Early indications aren't promising: the president on Friday dug in his heels on a tax hike for high earners, and House Speaker John Boehner dug in his heels on no new taxes. And yet Sean West of Eurasia Group sees some room for compromise: the president, for instance, appears open to a higher income threshold for the tax hikes. "Ultimately we maintain our view that a deal before year end is the most likely outcome."

But that leaves six weeks or so of quibbling, and the market could be an unfriendly place during that period. Buy-and-hold investors will have to stiffen their resolve.

"Volatility is going to be a constant for the next few months," said Steve Wood, chief North America market strategist for Russell Investments. "From a fiscal perspective, there's a lot more in flux than not."

One caveat to that statement: Obamacare is here to stay. Stocks moved on that reality. Traditional managed-care names mostly fell on the week, and hospitals were mostly higher.

The U.S. isn't the only place where government is in transition. Investors will also have to look to China, where a new generation of leaders is poised to take over just as the country begins to show signs that its economy has bottomed. More stimulus there is likely, says Wood. But how much and how soon is still an open question.

In Europe, the Greek Parliament voted on an austerity budget, but European leaders haven't yet agreed on when to release bailout funds that they've been withholding for months.

European leaders will meet on Monday, and they're expected to discuss the Greek issue, but not make an actual decision. In fact, they're telling reporters not to expect any immediate answers—they technically have until the end of the year.

Why do today what you can put off until New Year's Eve.

THE INVESTOR CONFERENCE for the Chicago charity Invest For Kids was propitiously or, perhaps, unpropitiously timed. It came on Wednesday, the day after Wall Street's Republican Party darlings largely took the pipe, causing the stock market to swoon.

The atmosphere at the conference was palpably gloomy. The normally ebullient real-estate magnate Sam Zell was decidedly downbeat. Nothing has changed in the U.S., he averred, except that the economic head winds of stagnant growth, dollar weakness, and budgetary improvidence figure to grind on for years. Europe is a basket case, with a disintegrating currency and near-term prospect of a demographic death spiral. Even emerging markets, something he hailed at last year's conference, stink now. Growth has slowed dramatically in the Big Three—China, India, and his longtime favorite, Brazil.

Yet stocks and real-estate prices in the U.S. remain at elevated levels, leaving the self-styled Grave Dancer scratching his head. His only advice was for investors to take stabs at "out-of-the-money Black Swan situations," whatever he meant by that.

Not to be outdone, Dallas hedge-fund manager Kyle Bass, of Hayman Capital, predicted an imminent financial collapse in Japan, despite that nation's decades of low interest rates, a strong currency, and positive trade and current-account deficits. According to Bass, today's complacency and calm are merely preludes to an apocalypse of extraordinary dimension for a country that has already "crossed the Rubicon." The government and society have accumulated staggering levels of debt that can never be paid back, especially with a shrinking population and deteriorating trade balances. Big companies like
Softbank9984.TO -0.20304568527918782%SoftBank Group Corp.Japan: TokyoJPY6881
-14-0.20304568527918782%
/Date(1438372800000-0500)/
Volume (Delayed 20m)
:
4657200
P/E Ratio
12.365668691370448Market Cap
8261744040375
Dividend Yield
0.5813108559802355% Rev. per Employee
131061000More quote details and news »9984.TOinYour ValueYour ChangeShort position
(ticker: 9984.Japan) see this collapse coming, and with their $20 billion deal with
Sprint NextelS -1.749271137026239%Sprint Corp.U.S.: NYSEUSD3.37
-0.06-1.749271137026239%
/Date(1438376671238-0500)/
Volume (Delayed 15m)
:
23117887AFTER HOURSUSD3.37
%
Volume (Delayed 15m)
:
925640
P/E Ratio
N/AMarket Cap
13370090319.8945
Dividend Yield
N/ARev. per Employee
1113940More quote details and news »SinYour ValueYour ChangeShort position
(S), are trying to get out of Dodge City, according to Bass.

JIM GRANT, former Barron's staffer and proprietor of the Interest Rate Observer, fit right in with the bearish meme by bemoaning the "seat of the pants" monetary policies of Federal Reserve Chairman Ben Bernanke, which have artificially extended the three-decade regime of falling U.S. interest rates.

"Low rates are now wired into the muscle memory of markets," he said, which means, according to Grant, that the day of higher rates and inflation is fast approaching. His main recommendation was naturally gold, or as he put it with Grantian elegance, "Buy element 79 on the periodic table."

Nonetheless, all was not doom and gloom at the conference. Longtime investor activist Nelson ("I'm really a constructivist") Peltz announced that his Trian Fund had just taken a 1% position in the French company
Danone
(BN.France). The company, he claimed, is a perfect 21st-century play in the global packaged-food industry, with its portfolio of products for the health-conscious consumer, including yogurt, infant and medical nutrition, and bottled water. Adding to the company's luster is the fact that over half its sales are in emerging markets, and those sales are growing smartly.

Peltz figures that the company can boost its share price by judicious cost-cutting and refraining from dilutive mergers. These measures alone could generate above-average gross margins and deliver a nice boost in the company price-to-earnings ratio on its "premier product mix."

FRANK BROSENS of Taconic Capital Advisors banged the drum for
General MotorsGM -1.2535255405828893%General Motors Co.U.S.: NYSEUSD31.51
-0.4-1.2535255405828893%
/Date(1438376429182-0500)/
Volume (Delayed 15m)
:
12147412AFTER HOURSUSD31.43
-0.08-0.25388765471278957%
Volume (Delayed 15m)
:
251876
P/E Ratio
11.529032966228824Market Cap
49911744201.6595
Dividend Yield
4.569977784830213% Rev. per Employee
707241More quote details and news »GMinYour ValueYour ChangeShort position
(GM). He contends that the stock, now trading at around $25, could as much as triple over the next three to four years, despite its lackluster performance since its initial public offering in 2010, because of several catalysts. Firstly, he likes the management team assembled by the former private-equity player Dan Akerson. The company, post-bankruptcy, can now make money at a U.S. sales level of just 11 million vehicles a year, though sales should push much higher, to 15 million or more, given the age of the U.S. fleet now on the road.

Likewise, he expects the Treasury Department to soon liquidate its 500-million-share position in GM now that the election is over and the Obama administration no longer fears negative headlines. This would eliminate much of the stock overhang stifling its performance, particularly if GM uses some of its cash trove to buy back half or more of those shares. Aditionally, the company is going through a major product-redesign effort that will boost 2013 car and—more important, because of their profitability—truck sales. Look for GM to earn as much as $10 a share three years out, Brosens says.

Alex Klabin, of Senator Investment Group, is partial toward
Rayonierryn -0.1218026796589525%Rayonier Inc.U.S.: NYSEUSD24.6
-0.03-0.1218026796589525%
/Date(1438376644734-0500)/
Volume (Delayed 15m)
:
957209AFTER HOURSUSD24.6
%
Volume (Delayed 15m)
:
51854
P/E Ratio
41Market Cap
3121740085.94513
Dividend Yield
4.065040650406504% Rev. per Employee
1877120More quote details and news »ryninYour ValueYour ChangeShort position
(RYN), a timberland company that is currently structured as a real-estate investment trust. He expects the company to eventually spin off its higher-margin, high-growth Performance Fibers business, which sells cellulose-based products to cigarette, consumer products, and food companies. This realignment could boost the stock from around $49 currently to as high as $80.

Steve Mandel of Lone Pine Capital talked up
VeriSignvrsn -0.12670702520061947%VeriSign Inc.U.S.: NasdaqUSD70.94
-0.09-0.12670702520061947%
/Date(1438376400172-0500)/
Volume (Delayed 15m)
:
818783AFTER HOURSUSD70.943
0.0030.00422892585283338%
Volume (Delayed 15m)
:
48669
P/E Ratio
28.039525691699605Market Cap
8051193428.6328
Dividend Yield
N/ARev. per Employee
972573More quote details and news »vrsninYour ValueYour ChangeShort position
(VRSN), in which his hedge fund has a substantial position. The company figures to have substantial earnings growth, both from ever continuing rise of companies and other institutions registering domain names on the Internet and government-approved price increases. This could lead to 25% annual earnings growth over the next four years.

ROUNDING OUT the roster of participants were Steven Romick of First Pacific Advisors and well-known international fund advisor David Herro of Harris Associates. Romick likes
Renaultrno.fr 0.7819078551666065%Renault S.A.France: ParisEUR83.78
0.650.7819078551666065%
/Date(1438382294000-0500)/
Volume (Delayed 15m)
:
1430071
P/E Ratio
12.65558912386707Market Cap
24775612362.1359
Dividend Yield
2.26784435426116% Rev. per Employee
369965More quote details and news »rno.frinYour ValueYour ChangeShort position
(RNO.France) because the stock is deeply undervalued due to Europe's economic woes. He claims that one gets the Renault operations for free after accounting for the company's stakes in Nissan, Daimler, Volvo, and the like.

Herro is partial to
PublicisPUB.FR 2.5446670276123444%Publicis Groupe S.A. ADRU.S.: OTCUSD18.94
0.472.5446670276123444%
/Date(1438381199000-0500)/
Volume (Delayed 15m)
:
27061
P/E Ratio
18.336721851098847Market Cap
16929702172.2726
Dividend Yield
1.758833157338965% Rev. per Employee
157061More quote details and news »PUB.FRinYour ValueYour ChangeShort position
(PUB.France), the French international advertising company. It has good emerging-market exposure and remained profitable even during the depths of the 2008-'09 global economic crisis. The company has also astutely adjusted to the digital age.